New York, October 19, 2012 -- Securitized credit card charge-offs in the US decreased to 4.11% in September from 4.19% in August, according to Moody's Credit Card Indices. Moody's expects the charge-off rate index to continue its modest decline as the historically low delinquency rates of this past summer would indicate.
"This month's improvement continues the steady declines since charge-offs peaked in the first quarter of 2010," said Jeffrey Hibbs, a Moody's assistant vice president and analyst. "In September, the strong credit trends that have been driving the charge-off rate steadily lower for the past several years remain firmly in place."
The delinquency rate index increased to 2.39% in September, seven basis points above the all-time low set last month. September typically features seasonally elevated delinquencies, according to Moody's, but this month's reading is just the second time since October 2009 that delinquencies have increased, as the improving credit quality of collateral pools has overwhelmed seasonal patterns.
The delinquency rate measures the proportion of account balances for which a monthly payment is more than 30 days late as a percent of total outstanding principal balance.
The principal payment rate index also receded from its all-time high set last month, but the overall third quarter mark of 22.07% established a new high, a continued indicator of strong credit trends. The yield index slipped again to 18.38%, which led the excess spread index to decline by a single basis point, although it is still near its all-time high level.
"Historically low delinquencies and high payment rates underscore the exceptionally strong credit quality of securitized credit card receivables," said Hibbs. "Issuers charged off the accounts of weaker cardholders at record levels during the recession, and originators have added few receivables from new accounts to securitizations."
The result, he explained, is credit card securitizations that almost exclusively comprise receivables of well-seasoned, high-quality cardholder accounts that have performed well despite persistently high unemployment.
Moody's subscribers may access the report at: http://www.moodys.com/research/Credit-Card-Charge-offs-Decline-in-September-Delinquencies-Tick-Higher--PBS_SF303938. For more information on extension of Moody's forecast for credit card charge-offs, see the latest Credit Card Statement newsletter at: http://www.moodys.com/research/Moodys-Credit-Card-Statement-Newsletter-October-2012--PBS_SF303629.
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Jeffrey HibbsAsst Vice President - Analyst Structured Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Luisa De Gaetano VP - Senior Credit Officer Structured Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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